The Discreet Science
April Newsletter: BSA/AML Compliance Hits the Big Leagues
Dear Friends,
There has been a lot of news around the subject of Anti-Money Laundering (AML) laws and the Bank Secrecy Act (BSA) recently.
On April 5th, Citibank agreed to a consent cease and desist order from the Office of the Controller of the Currency stemming from a AML monitoring mistake in 2006, according to the Wall Street Journal. Citibank is hardly alone in being tripped up by BSA/AML enforcement. The Vatican also had to endure a very public embarrassement recently when it was bothadded to a US watch list of countries the US government considers “vulnerable to money laundering” and had an account with JP Morgan Chase closed.
These stories remind us how even the most prominent institutions can unexpectedly be stymied in their attempts at complying with Anti-Money Laundering regulations.
The Cost of Compliance
One consultant’s report suggests that $5 billion was spent on AML in 2011, expanding at a rate of 7.8% annually (with the cost of AML software rising at a 10.4% annual rate.) By 2013, the total AML burden will be nearly $6 billion. That’s a lot of money.
At K2 Global, we’ve been developing a new approach to our AML compliance consulting that combines long investigative experience with novel technologies that will help a bank’s team streamline the investigative process while adding a dramatic new way to visualize the enormous amounts of data generated in the banking process. We offer mid-size banks and broker/dealers a best-in-class Financial Intelligence Unit at a manageable cost.
The Vatican’s Campaign for the “White List”
I want to focus for a moment on the Vatican story. From the headlines, you might have gotten the sense that the Vatican was being punished for not taking AML seriously. But that’s not what happened.
The Vatican spent much of 2011 enacting new laws to shore up its AML controls. The US State Department watch list that placed the Vatican within the category of “concern,” alongside countries like Ireland , Chile and Poland, was a positive step for the Papal state which is looking forward to June when the European Commission releases its “white list” of countries that meet the highest standards of anti-tax fraud and money laundering provisions. The Vatican hopes to be on that list.
Even with the progress that’s been made, one account at a Vatican bank called the Institute of Works of Religion (IOR) could derail the Vatican’s hopes. JP Morgan Chase closed a so-called “sweeping” account. JP Morgan Chase made a decision to close the account because they did not receive enough information on the account’s wire transfers. That action clearly illustrates the rising standard of scrutiny in AML compliance.
K2 Global’s BSA/AML Capabilities
At K2 Global, Vincent D’Amelio and Thomas Bock lead our Bank Secrecy Act and Anti-Money Laundering compliance team. In the last year, they have begun to implement KYC programs, conducted risk assessments and assisted in the global implementation of a transaction monitoring system on behalf of financial service clients.
A key focus in for this year and in the future will be a shift to how financial institutions use AML compliance management software. Vincent, Tom and their team can help these financial institutions choose the right software to eliminate the silos created by automated systems and create an enterprise-wide view of AML risk.
In addition, using K2 Global’s proprietary software, our team can help financial institutions visualize relationships between parties and analyze suspicious activity in a more efficient and cost-effective manner.
If your institution, or a client’s institution, would like to hear more about our capacity to advise on AML Program implementation, transaction monitoring “look backs,” or any other BSA and AML-related matters, I’d be happy to go into further detail about how our growing team can benefit you and your enterprise. Please feel free to get in touch.
Best,
Jeremy Kroll
CEO and Co-Founder
K2 Global Consulting N.A., LLC
www.k2global.net
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